Beijing’s Yikatong and Singapore’s Ezlink: Payment for Taxi Fare

In my last post, I talked about Yikatong and Ezlink as a form of payment for buses and train rides.  Both cards can also be used to pay for taxi fare. I have used this option a number of times in Singapore and tried (unsuccessfully) to pay with the Yikatong just last week.

My recent ride in Beijing was from Tsinghua University to Tiananmen Square (approximately 16km) and cost 60RMB (approximately $12SGD). One trip I paid for with Ezlink in Singapore was from my home in Jurong West to the Orchard Road shopping district (approximately 24km); it cost about $30SGD (about 150 RMB).

In both cases, the taxi drivers didn't really want to accept payment by transportation card. Both preferred cash, the most common form of taxi fare payment in both countries. The Singapore driver had no choice but to accept my card, as I did not have enough cash with me at the time. Here's my exchange with the Beijing driver:

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28 Million 3G Users in China through July 2010

China's 3G users reached 28.08 million at the end of July, 2010, an increase of 10 million from the end of the 1st quarter of 2010, according to the latest statistics released by China's mobile operators.

Unsurprisingly China Mobile, China's largest mobile operator, is leading the pack with 13.42 million 3G users and China Unicom's 3G users number 9.51 million as of August, 2010. China Telecom, the last of China's three wireless carriers to offer 3G services, reported 7.18 million 3G users as of June, 2010. China Telecom only releases their 3G user number once a quarter, but the MIIT (Ministry of Industry and Information Technology) estimates China Telecom has reached 7.75 million 3G users in July.

Although we are seeing rapid growth in 3G numbers one must remember that they are still a small fraction of China's 804.52 million mobile users.

Check out our statistics section to find out the latest mobile user numbers, fixed line subscribers, xiaolingtong users, and more.

Beijing's Yikatong and Singapore's Ezlink: The Growth of Contactless Payment

(I am currently serving a yearlong internship at Maverick China. This is the first in a series of blog posts on my own experiences with electronic payments in China.)

It has been almost a month ever since I arrived in Beijing. One of the first few necessities that I had to get was the Yikatong, a contactless payment card used primarily for payment on public buses and subways instead of cash. Singapore's version of Yikatong is called the Ezlink card. Below are a few observations drawn from my experience using both Yikatong and Ezlink.

One difference lies in the fares for both systems.

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99Bill and China's new payment license rules

In our previous post about the new license requirements for third-party payment providers in China, we stated that we expected the largest companies to face little trouble in getting licenses. It is still unclear how the regulations will affect 99Bill, however. Just around the time the PBOC's statement was released, a 99Bill executive was arrested for transferring funds of over RMB 3 billion to an offshore gambling syndicate, according to a report (Chinese) by the Ministry of Public Security. 99Bill, however, has issued a response (Chinese) decrying what they describe as "media reports" and claiming that the man arrested is not a high level executive in their company. The details are still murky and it is not clear whether this matter will impact 99Bill's eligibility for a license. We'll continue to monitor the situation.

China Payment Regulations Announced - Implications and Analysis

On June 21, the People's Bank of China (PBOC), China's central bank and chief financial regulator, issued a statement stipulating that non-financial institutions will be required to obtain a license from the central bank in order to provide third-party payment services. This long-awaited announcement, which goes into effect on September 1, targets online payment providers such as Alipay, Tencent, YeePay, and 99Bill.

According to the PBOC statement, license applicants must meet the following key stipulations (for a Chinese-language list of all requirements and application procedures, click here):

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Thoughts on the SMG-China UnionPay Partnership

Recently China UnionPay and Shanghai Media Group (SMG) announced a partnership "...to explore online payment solutions based on multiple terminal platforms in the broadcasting and TV industry such as digital TV, IP TV, mobile TV, Internet TV and TV shopping":

The CUP-SMG strategic cooperation aims at integrating the the new media digital TV with e-commerce and financial payment. Through sharing channels and recourses, it promotes the creative functional application of TV, mobile phone, computer and other terminal platforms so as to help the user to make online payments for TV shopping, program ordering and TV games. Such an approach realizes seamless connection between “watching TV” and “using TV” and facilitates the rapid and sound development of China’s new-style cultural media, financial payment and e-commerce industries.

China UnionPay runs China's inter-bank transaction settlement system; SMG is the country's largest cable TV provider outside of CCTV. While much smaller than CCTV, SMG has been faster to adjust to the changing tastes of its audience, while CCTV remains hampered by its role as a key government propaganda organ. Both CUP and SMG have broad interests, but the initial focus of their partnership is likely to be in developing pay-per-view and video-on-demand platforms.

It's going to be difficult to get Chinese viewers to pay a premium for TV services, for a number of reasons:

• Consumers aren't used to paying much for TV. In Beijing the current cost for cable is 18 RMB per month, usually paid a year at a time. In comparison, a standard home broadband connection is 120 RMB per month, and at China Mobile, the nation's largest telecom carrier, the average subscriber paid 77 RMB per month for mobile service in 2009. Despite the relatively low cost, it's still not uncommon to hear people complaining about last time prices went up (from 12 RMB per month in 2003).
• Cable TV content simply cannot compare to what people can download and stream, usually for free. Every day millions of people spent 2-4 RMB per hour in internet cafes simply to watch TV shows and movies. And just like everywhere else, young people in China are the most comfortable with watching video on a computer instead of a regular TV.
• While SMG is constantly trying to expand the range of content it can provide, China's State Administration of Radio, Film and Television (SARFT) is constantly finding new topics to remove from TV, including gossip about celebrity scandals, foreign cartoons, and shows about plastic surgery.

For a sample of just how much can go wrong in pushing premium TV in China, check out this article about WinTV's attempt to set up a subscription-only system for English Premier League matches.

Takeaways from Payment China 2010 Conference in Beijing

On May 11-12, I attended the Payment China 2010 conference in Beijing. The event covered on a wide range of topics within China's payment industry, and the most common theme among the presentation was a familiar and optimistic one: that Chinese consumers are increasingly using using non-cash payment methods, and that this development opens the doors for the introduction other forms of electronic payment.

Liu Fengjun from China UnionPay discussed the company's recent partnership with PayPal for online payment. Mr. Liu talked about the increase in the average consumer’s disposable income, which has led to a greater value being placed on quality products. Since Chinese consumers are far more likely to associate quality with foreign brands, Liu believes that online purchases of imported goods will continue to grow strongly.

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Boaz Rottenberg Attends Dinner with Israel Ambassador to China, Amos Nadai

Maverick Co-Founder and General Manager Boaz Rottenberg attended a dinner at the residence of Amos Nadai, the Israeli Ambassador to China, on April 22, 2010 in Beijing. The event was held for Israeli Chamber of Commerce (IsCham) corporate members in China.

GoDaddy partners with AliPay, Alibaba partners with PayPal

So far in 2010 there have been a couple of interesting pieces of news concerning the Alibaba Group and its payment platform, Alipay. In January GoDaddy announced that it had begun accepting Alipay payments for domain name registration and other web services. A few days ago, Alibaba announced that it has begun to accept PayPal payments on its AliExpress site.

Here's a screenshot of GoDaddy's current payment method selection page, courtesy of AdesBlog:

We have reported in the past on Alipay's plans and struggles for expanding overseas. Expect to see Alipay popping up as a payment option on more and more non-Chinese websites in the future.

Maverick China and Yankee Group to Merge?

Back in December 2009, someone named Gabriel Gheorghiu, writing for something called the "TEC Blog", penned an interesting piece entitled "What-if Scenarios for Analyst Firm Mergers and Acquisitions":

Now that Gartner is acquiring AMR, we cannot help but wonder what will be the next acquisition or merger in the business software research field. There are not so many companies doing business software research and analysis, so the number of permutations is quite low. Let’s look at some of them and what the end result would be.

Gartner acquires Aberdeen and launches The Magic Axis (Magic Quadrant + Aberdeen Axis). If theydecide to acquire Forrester, that would be the Magic Wave (Magic Quadrant + Forrester Wave). Aberdeen and Forrester will probably not merge or acquire one another because the Axis Wave simply doesn’t sound right.

To avoid any COMMfusion, ITI and ITTI could merge and form ITTTI. After US President Obama’s visit to China, Maverick China Research and the Yankee Group might merge, forming the strongest analyst firm in the world, which will slowly acquire all competitors.

 

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